* Stocks choppy after declines on Wall Street; KOSPI sinks

2%Market weighs possibility of two Fed rate hikes before

year-end

* Yen near weakest in 40 years, Katayama holds meeting with

Bessent

By Gregor Stuart Hunter

SINGAPORE, June 23 (Reuters) - Asian stocks mostly eased and

oil prices regained strength early on Tuesday after the U.S.

waived sanctions on Iran, while traders grappled with rising

expectations the Federal Reserve may take more aggressive action

to tackle inflation later this year.

MSCI's broadest index of Asia-Pacific shares outside Japan

fell 0.5%, while S&P 500 e-mini futures

slipped 0.2%. Brent crude was up 0.2% at $78.03 per

barrel.

The Nikkei 225 was off 0.6%, retracing some losses

after data showed Japan's manufacturing sector sustained robust

growth in June, with new orders surging to their fastest pace in

more than four years.

South Korean shares fluctuated between gains and

losses and were last 2% lower, while Taiwanese stocks opened

0.9% higher, setting a new high.

"These are far from dull markets," said Chris Weston, head

of research at Pepperstone Group Ltd in Melbourne. "The former

generals of the market appear to have lost momentum, and

investors are rotating into other areas of the market that are

more defensive, less AI-focused and offer more predictable cash

flows."

Stocks on Wall Street moved lower overnight, with the S&P

500 down 0.4%, and the Nasdaq Composite slipped

1.3%, dragged by declines in megacap technology stocks including

Alphabet and SpaceX.

Oil prices settled more than 3% lower as supply concerns

eased after U.S. Vice President JD Vance said progress had been

made in talks with Iran and that the Strait of Hormuz was open.

In currency markets, the yen was flat against the

dollar at 161.55 yen, again approaching its weakest levels in 40

years after a volatile trading session in the U.S. overnight.

Japanese Finance Minister Satsuki Katayama held an online

meeting with U.S. Treasury Secretary Scott Bessent late on

Monday, a source close to the discussion said, as concerns grow

over sharp currency swings.

The British pound was flat at $1.3247 after Prime

Minister Keir Starmer said on Monday he would resign, paving the

way for what is expected to be an orderly transfer of power to

frontrunner Andy Burnham.

The U.S. dollar index, which measures the greenback's

strength against a basket of six currencies, was trading at

101.04, close to its highest since May last year.

Traders are grappling with expectations of an accelerated

schedule of rate hikes by a more aggressive Federal Reserve

under the leadership of new Chair Kevin Warsh.

Fed funds futures are pricing an implied 54% probability of

at least two 25-basis-point hikes before the end of the year,

compared with a 15.2% chance a week ago, according to the CME

Group's FedWatch tool.

The yield on the U.S. 10-year Treasury bond was down 0.2

basis point at 4.501%.

Gold was down 0.2% at $4,180.38. In cryptocurrency

markets, bitcoin slid 0.8% to $63,873.71, while ether

was 0.5% lower at $1,724.08.